Mark2 had one giant fruit salad for lunch today…filled with APPLES and ORANGES!

lbsles

Calling the Keynesians’ Bluff

By Nathan Smith
Friday, February 1, 2013

It’s time to enter the inner sanctum of Keynesian theory and see what (little) it’s worth.

As a rule, the latest economic figures are not that important in themselves, but they shed fresh light on long-run trends. It may or may not be true, as Dean Baker suggests, that the 0.1 percent decline in GDP in the fourth quarter of 2012 (according to preliminary Bureau of Economic Analysis estimates) was caused by a decline in government, especially military, spending. But the real question is why the economy is so feeble that it couldn’t take a few defense cuts in stride. The big picture, which the latest data make a little clearer, is the ongoing poor performance of the Obama economy and the Keynesian paradigm that has informed the Obama administration’s economic strategy.

It’s time to call the Keynesians’ bluff, to enter the inner sanctum of Keynesian theory, and see what (little) it’s worth. I saw the basic Keynesian models first when I was an undergraduate, and they made me uneasy. Fifteen years or so later, after grad school and some policy jobs, and having studied the models a few more times and taught them to undergrads myself, I’m still an unbeliever. Here’s why.

Summation:
The Long Run

Citizens and politicians should learn their lesson — that fiscal stimulus doesn’t work — and focus on dealing with long-run problems. Not only will fixing those problems benefit us in the long run, it’s probably the best thing we can do for the economy in the short run too. As shown in Figure 5, gross private domestic investment has recovered somewhat since the nadir of the Great Recession, but it’s still far below its 2006 peak; since 2009 it has been lower in real terms than at any time between 1999 and 2008 (pending final 2012 data). Investment is crucial to our future: it’s the source of capital that can make workers more productive and raise living standards. But more investment would also create more demand for workers right now. Why aren’t firms investing? Low interest rates should encourage investment. Even more, record-high corporate profits should encourage investment. Superficially, it’s ironic that corporate profits are doing so well under a relatively anti-business presidential administration, but this is actually just what we should expect. Investment is low, therefore capitalists face little competition and can make more money. But what’s good for some corporate incumbents is bad for the rest of us. There’s some force — but not much — in the Keynesian argument that investment is low because demand is weak and more capacity isn’t needed. Investment is oriented toward the future, sometimes the rather far-off future, and presumably there would be plenty of long-term projects worth financing with today’s cheap money if firms felt confident that the economy will get back to normal and taxes and regulations won’t expropriate them ex post. The great investment slowdown is a complex whodunit, but the guiltiest-looking suspect is political risk.

To encourage investment, the government needs to find a way to credibly recommit to letting investors keep their money if they succeed. Mainly, that involves appeasing the confidence fairy by making it clear how the country will pay its bills. Generally speaking, markets allocate resources better than governments, so the more government spending is held down, the better the economy does. The 1990s, a rare oasis of fiscal discipline and (as a result) a booming economy, are the example to emulate. But for a given trajectory of spending, it’s better to know how it will be paid for, so that private sector actors can plan around it, than for the economy to be burdened with the uncertainty that deficits create. All this is fairly easy to see, once you take off the Keynesian spectacles.

President Obama mentioned “jobs” only three times in his recent inaugural address, “workers” one time, and “unemployment” zippo. The January jobs report provides a sober reminder that the US labor market, while recovering, remains extraordinarily weak. The official unemployment rate ticked up to 7.9% as 157,000 net new jobs were created, according to the Labor Department.

To provide some context, recall that back in January 2009 Team Obama economists Jared Bernstein and Christina Romer predicted the unemployment rate by 2013 would be closing in on 5%. (Of course, Obama’s economists also thought we’d be in a mini-boom of 4%-plus economic growth. That hasn’t happened either.) Oh, and at the January pace of job creation, we won’t return to pre-Great Recession employment levels until after 2025, according to the Hamilton Project’s Jobs Gap calculator.

Now, there were some nice upward revisions to 2012 job growth. Instead of an average of 153,000 net new jobs a month last year, the US economy generated more like 181,000 jobs. And strong upward revisions to the November and December numbers suggest economic growth may not be as weak as the fourth-quarter GDP report suggests.

But two broader measure of labor market health — the employment-population ratio and the labor force participation rate — remain stuck at anemic levels. Indeed, if labor force participation were the same as when Obama took office, the unemployment rate would be 10.8%. As it is, the U-6 unemployment rate — which includes a) part-timers who want full-time work and b) the discouraged who want a job but haven’t searched for work in the prior month because they believe no jobs are available — remained at 14.4% for the third straight month.

When might the economy return to the sort of unemployment rate we saw before the Great Recession, say, 4.5% or so? Let’s assume a) labor force participation regains half the ground it’s lost over the past four years, and b) job growth keeps turning in 2012-like performances. According to the Atlanta Fed’s jobs calculator, it would take another eight years to get back to the unemployment nadir of the George W. Bush administration. And that’s assuming, we don’t suffer another recession between now and then.

No one has ever used Keynesian s , for they for get to pay back all the money the spent. So people that use this are fake.

Doug Z

Mark love spending

“This is a permanent political class that has now formed an aristocracy. That’s why nothing has changed in Washington.”

“America’s previous boomtowns became wealthy because they produced something,” said Schweizer. “This boomtown, its wealth comes from extracting it from the rest of the country.”

lbsles

Menendez drained more than 1/3 of bank accounts in January to pay for past Dominican Republic travel

A check that Democratic New Jersey Sen. Bob Menendez wrote to his longtime campaign donor Dr. Salomon Melgen on Jan. 4 to cover private jet travel to the Dominican Republic represented more than one-third of his cash-on-hand — and perhaps as much as 90 percent — according to an analysis of his most recent U.S. Senate financial disclosure report.

Dan O’Brien, Menendez’s chief of staff, told WNBC-TV4 in New York on Tuesday that the senator reimbursed Melgen $58,500 for two trips they took together to the island nation in 2010. (RELATED: Menendez admits frequent Dominican travel, reimburses FBI-raided donor)

Menendez signed a disclosure statement on May 9, 2012 indicating that he had between $66,003 and $165,000 in three different bank and credit union accounts. His only other asset is a rental property worth between $250,001 and $500,000.

New York Democratic Sen. Chuck Schumer on Monday applauded Florida Republican Sen. Marco Rubio for helping craft a blueprint for a bipartisan rewrite of immigration law.

But on Thursday, Schumer dropped a political anvil on him by gutting his part of the overhaul.

On Jan. 31, Schumer redefined the deal during a press conference, embarrassing Rubio, who is a potential GOP candidate for the White House in 2016.

“In our blueprint, or what we’ve talked about, I don’t know if [a border-security trigger] is explicitly in the blueprint,” he said.

“We set up a committee of border-state people, [and] the purpose of that committee is to get input from them, to have them be part of the process, for them to understand that we’re not going to roll over them, but get a great deal of input.”

“What we’ve proposed is that the [federal Department of Homeland Security] secretary —- whomever it is —- will have final say” on when enforcement is deemed sufficient to begin awarding citizenship to illegal immigrants, he said.

Here we have ibsles spouting off absurdities from the John Birch Society and Rush Slimebaugh–it’s good only a very few really uneducated people think like this. Stan runs ibsless a close second in absurdities…

Stan T

Bobbyv
Posted February 1, 2013 at 2:51 PM
Wasn’t the Dow higher under GWB? And didn’t we hear that only the rich benefitted?

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Yes, Notice it’s the highest in 5 years, which was 1 years after the Democrats took over the congress in Jan 2007. It was higher under Bush and the Republican congress….and they weren’t printing $85 billion a year to do it…

usa8888

Did you see where Hilary beats all comers in the 2016 presidential election in texas, including Perry. The old white confederates are fading from the scene and Texas will be going blue soon….

Mark2 had one giant fruit salad for lunch today…filled with APPLES and ORANGES!

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And O'Reilly didn't get 253,000…he got 463,000….it's Rachel who got only 246,000

Ratboy

Now which one of you loons are going to defend THIS???

Disgraceful: Chris Matthews Smears John McCain as an ‘Angry’ Vietnam Vet Having a ‘Flashback’

Liberal anchor Chris Matthews on Friday stooped to new low, smearing John McCain as an “angry” Vietnam veteran who is having a “flashback.” Resorting to the cheapest of stereotypes, the Hardball host attempted to explain why McCain so aggressively opposed Chuck Hagel’s nomination to be Secretary of State.

Matthews opened the show by sneering, “Why is John McCain so angry? Forty years after the Vietnam POWs came home, the most famous of them is angrier than ever.” Regarding Thursday’s congressional hearings, the journalist asserted that Vietnam “flashbacks must haunt still the mind and heart of John Sidney McCain.” Dredging up the cliches of the unstable Vietnam veteran, Matthews declared, “…But I’m absolutely convinced we’re watching a flashback.”